Most people think that they understand how assets will be distributed if they use a will, and they have a fear of the unknown when it comes to trusts. In reality, some of these folks do not fully understand how the estate administration process works with each respective document.
The Executor and the Probate Process
If you use a will to state your final wishes, the executor that you name would handle the estate administration tasks. They would not be able to act independently without any supervision.
The will would be admitted to probate, and the court would oversee the proceedings. We are not going to get into the intricacies, but suffice to say that probate is time-consuming and expensive.
At the end of the day, the “simple will” is really not that simple after all.
Living Trust Administration: Phase 1
A living trust administrator is the trustee, and while you are living, you would act as the trustee.
As the trustee, you would have complete control of the assets in the trust. For example, if your checking account was in the name of the trust, you could write checks and take withdrawals as usual.
We are not necessarily recommending this course of action, but the example illustrates the level of control that you would retain.
This type of trust is revocable, so you could dissolve the trust entirely and take back direct personal possession of the assets if you choose to do so. You also have the ability to change the terms of the trust.
A significant percentage of elders become unable to handle their financial affairs at some point. To account for this possibility, you can name a disability trustee who would fill in for you if it becomes necessary, and this is another benefit.
After Your Passing
When you establish the trust, you name a trustee to succeed you after your passing. This can be a trust company or another professional fiduciary, and you can alternately engage someone that you know personally.
There is flexibility with regard to the distribution structure, and this is an advantage over a simple will. You do not have to instruct the trustee to distribute all the assets in lump sums immediately after your passing.
However, if you are going to provide inheritances all at once, the trustee will have a relatively simple and straightforward task, so a very high level of financial expertise may not be needed.
On the other hand, if you have income-producing assets in the trust and you want it to remain intact for an extended period of time, you may want to use a professional fiduciary.
To protect loved ones who may not be ready to handle large sums of money, you could include a spendthrift provision, and the principal would be protected from the beneficiary’s creditors. You could instruct the trustee to distribute a certain amount each month, or you could dictate some other incremental distribution arrangement.
Need Help Now?
Our doors are open if you are ready to work with a Burbank, CA estate planning lawyer to put a plan in place.
Each situation is unique, and as you can see from this post, there are different approaches that can be taken. The right strategy will depend on the circumstances, and when you work with us, we will help you develop a custom crafted plan that ideally suits your needs.
You can set the wheels in motion right now if you call us at 818-937-2335, and you can fill out our contact form if you would rather send us a message.